“I felt like the captain of the Titanic,” said Liu, the first chairman of the CBRC. After he looked at all kinds of regulatory and market data, what he saw was “terrifying”. Liu is now a distinguished fellow at the Fung Global Institute.

Back then, China’s non-performing loans by outsiders were estimated at 25-60 per cent of total loans. Liu briefed Premier Wen Jiabao of his plan to turn around China’s entire banking industry.

“I assured him that we would succeed as long as I was allowed to be tough and to act fast.” The premier endorsed his proposal right away.

Since then, all banks big and small have been reformed, while the CRBC disclosed to the world what was happening because transparency was crucial in building trust at home and overseas.

As a result, 41 foreign strategic investors joined 32 Chinese banks, ranging from the top five to a very small bank in a remote area. Nine foreign banks invested in 41 township financial institutions. Bit by bit, bad assets were hived off, capital was injected and skills and knowledge poured in.

Today, all four big state banks and 10 medium-sized mixed-ownership banks are listed at home and abroad. Their revenue has increased by 15-20 per cent annually. When he left his job last October, he said he no longer felt like the captain of the Titanic.

Successful reform helps promote the Chinese economy. After all, when China started opening up in the late 1970s, per capita income was only US$182 and trade accounted for 11.2 per cent of gross domestic product, compared with $5,414 (Bt172,300) per capita and trade accounting for 65 per cent last year.

Stuart Gulliver, chief executive officer of HSBC Holdings, said Asian markets had so far managed to avoid adverse effects from the crisis in Europe partly because Asian financial markets are now better regulated.

The Asian financial markets have learned a lesson from the financial crisis of 1997. The current situation in Greece has some similarity to the crisis of the Thai baht. Both saw excessive leverage against the exchange rate.

European countries now see debt at a high level. For instance, Britain’s household debt is about 100 per cent of GDP, Gulliver said.

Although Asian countries are set to thrive amid the crisis, the region still faces challenges. Isher Ahluwalia, chairwoman of the Indian Council for Research on International Economic Relations, said that, for instance, India still had to balance growth to make it sustainable, develop urbanisation and fix the skill deficit, which is a problem that was never heard of until recently.

Dr Ahluwalia said that when India enjoyed economic growth of 5-5.5 per cent, “we thought that we had enough engineers and scientists”. But that is not the case now. India faces a challenge in finding skilled workers.

India still has to be prepared for urbanisation, even though migration is less than in other countries. Only 30 per cent of Indians have migrated to the cities, compared with 50 per cent in China. But the figure is set to rise along with greater economic development. Therefore, the government is facing the challenge of promoting sustainable investment, she said.